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Bahama Bob's Rumstyles

Monday, January 21, 2013

Barbados Making Noise Over the Rum Subsidies

In an article in Caribbean 360, Barbados Prime Minister Freundel Stuart spoke out the the growing problem of the United States rum subsidies to the U.S. Virgin Islands and Puerto Rico and the ripple effect that it is having on the rest of the Caribbean rum producers.

BRIDGETOWN, Barbados,
Saturday January 19, 2013 –

Caribbean Community
(CARICCOM) rum producing countries are holding high-level talks with the United
States on resolving issues surrounding the rum industry in the region, Prime
Minister Freundel Stuart has announced.

A government statement
said that Prime Minister Stuart made the announcement as he addressed a
ceremony unveiling a commemorative plaque for Mount Gay Distilleries’ New Aging
Bond earlier this week.

Prime Minister Stuart
said the discussions, which are also being attended by officials from the
Dominican Republic, were necessary since, within recent time, subsidies had
been given to rum producers in the United States Virgin Islands and Puerto
Rico, much to the disadvantage of Caribbean rum producers, including Barbados.

He said the situation is
so serious that Barbados is prepared to take its case to the World Trade
Organization (WTO) if a solution is not forthcoming.

“The Government of
Barbados has had to take a stand on this issue, and under my instructions, the
Ministry of Foreign Affairs and Foreign Trade communicated with the US
Government on this issue. And, of course, very recent discussions have taken
place between CARICOM countries, the Dominican Republic and the United States
Trade Representative with a view to addressing the more pressing concerns of
rum producers, not only here in Barbados, but in other parts of the Caribbean,
and, of course, in the Dominican Republic,” he said.

Prime Minister Stuart
said that CARICOM was not going to “relapse its vigilance” on the issue.

“We are not about to
relax our persistence on this issue… We do not intend to allow rum producers in
the Caribbean to be so severely disadvantaged by this market distortion which
has resulted from these overwhelming, if I may use that word, subsidies being
extended to producers in the US Virgin Islands and Puerto Rico.”

Last month, the CARICOM
Council for Trade and Economic Development (COTED) said the region
continues to have “serious concerns” regarding the competitiveness of Caribbean
rum in the United States.

"In addition to
being the largest agriculture-based export industry in CARICOM, the rum
industry is a substantial employer and a major contributor to foreign exchange
earnings and government revenues," COTED said.

CARICOM Secretary
General Irwin LaRocque said that the rum issue, involving Diageo, the global
rum producer, continues to "threaten Caribbean rum into the US market, and
the leaders agreed that strong and urgent political intervention was needed to
address that issue.

"There is a concern
with regards to some subsidy that is being provided for Diageo, the
multilateral and one of the largest rum producers which is currently located in
St Croix in the US Virgin Islands," said LaRocque.

"Last August, the
UK-based Diageo reportedly warned that should CARICOM mount a complaint to the
WTO over the alleged subsidies it would "re-evaluate" its Caribbean
interests.

Diageo has denied
'flooding' the US market and has defended the US governments 100-year-old
'cover over' programme, which it said granted the USVI and Puerto Rico
much-needed revenues to promote economic stability and fiscal autonomy.

Prime Minister Stuart
has assured rum producers in Barbados that his administration “is alert to your
concerns on this issue, and that CARICOM and the Dominican Republic are working
collaboratively to ensure that we reach some kind of resolution on this
matter”.

Stuart said rum “has
steadily become a serious foreign exchange earner for Barbados” adding “you
really cannot run a country like Barbados, a small open economy, unless you
have reliable sources of foreign exchange.

“And, the rum industry
has been making its own contribution to Barbados’ gathering of foreign exchange
needs to make life more tolerable and more abundant for the people of our
island.

“So, we cannot
afford to ignore threats to the industry. Threats to the industry are not for
us a luxury, but we have to take these threats seriously and spring into action
to protect the industry wherever these threats occur,” he added.

On the heels of the "Fiscal Cliff" legislation that .extended the rum subsidies to the U.S. territories, this is what I feel is only the beginning of the latest round of actions in this ongoing dispute.

Thanks Bob. We all should be aware of the current crisis which threatens Caribbean rum as we know it. Massive subsidies by the USVI to Diageo and Fortune - to the tune of over $6 Billion have completely upset the market and may drive Caribbean competitors out of business.

I urge you to also read this article by Davin Kergommeaux (author of "Canadian Whisky, the Portable Expert", contributor Whisky Advocate Mag) on his website:http://www.canadianwhisky.org/news-views/rum-war-threatens-small-caribbean-producers.html

Davin quotes Dave Broom and discusses what needs to be done. Be sure to check it out. There is also a petition to Save Caribbean Rum, and if you agree, please sign it.